Officials grilled on drilling rules

Stakes high over how 2 new laws are implemented

By Laura Frank, Rocky Mountain News (Contact)

Thursday, March 6, 2008

Tempers flared and text messages flew Wednesday as lawmakers tried to figure out if the state oil and gas commission was about to get the authority to override landowners' wishes.

"It's a clear reach beyond the authority they were given," said an agitated Sen. Josh Penry, R-Grand Junction.

In a basement room at the Capitol packed with industry lobbyists, lawmakers from both House and Senate natural resources committees were briefed on the process state officials are using to write the rules on how two new oil and gas drilling laws will be implemented.

The two laws passed last year (HB 1298 and HB 1341) focus on minimizing environmental impacts of drilling.

The stakes are high as the $23 billion industry pumps thousands of jobs and millions of tax dollars into the state. At the same time, the energy boom has brought inflation, labor and housing shortages, and environmental and health concerns.

The Colorado Oil and Gas Conservation Commission, with the help of the state Department of Public Health and Environment and Colorado Division of Wildlife, has until March 31 to present draft rules on implementing the laws. Officials, however, have asked for an extension until mid-July to finish the job.

"There's been an immense amount of speculation about what these regulations are going to say," said Harris Sherman, director of the state Department of Natural Resources. "I think we'll have a better idea when we see the actual proposed regulations. I would just ask for your indulgence."

The preliminary draft rules suggest that the oil and gas commission might override an agreement between those who own the surface of the land and those who own the mineral rights below if that agreement doesn't meet the commission's standards of protecting public welfare or wildlife.

"If the mechanism overrides the consent of the landowners, I'd be very uncomfortable with that," said Rep. Kathleen Curry, D-Gunnison.

Other lawmakers questioned whether the proposed rules, which include new forms and other requirements, might drive industry out of Colorado.

Sen. Greg Brophy, R-Wray, said one company has left the state to focus on drilling in Nebraska and Kansas, where he said getting a drilling permit takes a matter of days compared with three months in Colorado.

"I don't believe these rules and regulations are going to drive industry out of Colorado," Sherman said. "Quite the contrary, we hear almost every week from companies who want to come to Colorado."

frankl@RockyMountainNews.com or 303-954-5091

Industry-friendly

Will tightening regulations on the oil and gas industry in Colorado drive some of the $23 billion industry out of the state?

Lawmakers on all sides are sensitive to the question. Wednesday, those most closely following the issue took note of a new report released in December.

The Fraser Institute, a Canadian think tank, polled industry leaders, asking them where they'd found the most favorable public policies, such as taxation and regulation, and the best business environment with the fewest barriers.

According to the study, the top five places for industry-friendly oil and gas development: Malaysia, Romania, Qatar, Thailand and Colorado.